Housing Deposit
Calculate how much you need to save for your home down payment and create a savings plan.
Understanding Down Payments
Your down payment is the upfront cash you pay toward a home purchase. A larger down payment means a smaller mortgage, lower monthly payments, and often better interest rates.
- 3-5%: FHA/conventional minimum – requires PMI
- 10%: Good balance of savings and loan terms
- 20%: Avoids PMI, best rates, strongest offers
PMI Explained
Private Mortgage Insurance (PMI) protects lenders when you put less than 20% down. PMI typically costs 0.5-1% of the loan annually.
- On a $320,000 loan: $133-267/month in PMI
- PMI can be removed once you reach 20% equity
- Some lenders offer lender-paid PMI with higher rates
Saving Strategies
- Use a high-yield savings account (4-5% APY)
- Set up automatic monthly transfers
- Cut major expenses: dining, subscriptions, vacations
- Consider a side income specifically for your deposit
- Look into first-time homebuyer programs in your area
Additional Costs
- Closing costs: 2-5% of purchase price
- Home inspection: $300-500
- Moving expenses: $1,000-5,000
- Emergency fund: Keep 3-6 months expenses separate
- Don’t drain all savings – keep reserves for repairs
Frequently Asked Questions
How much down payment is required to buy a home?
Conventional loans typically require 5–20% down, though some programs allow as little as 3%. FHA loans require 3.5% with a credit score of 580+. Putting down less than 20% on a conventional loan usually triggers PMI (private mortgage insurance) costing roughly 0.5–1% of the loan amount annually. The calculator offers 5%, 10%, and 20% presets.
What are closing costs and does the calculator include them?
Closing costs are fees charged at settlement — including lender origination fees, title insurance, appraisal, and prepaid taxes/insurance — typically totaling 2–5% of the loan amount. The calculator shows a closing cost estimate alongside the down payment so you can see the total cash needed, not just the down payment.
How does the calculator estimate time to reach my savings goal?
It uses the future value of an annuity formula: Time = number of months until (Current Savings × (1+r)^n) + (Monthly Savings × ((1+r)^n − 1)/r) ≥ Down Payment Target, where r is the monthly interest rate (APY/12). The calculator solves for n given your current savings and monthly contribution.
Does the calculator factor in interest on my savings?
Yes — you enter an expected APY (annual percentage yield) on your savings account. The calculator applies monthly compounding at APY/12 and shows total interest earned separately, which can meaningfully accelerate your timeline if you use a high-yield savings account currently yielding 4–5%.
What is PMI and when can I stop paying it?
PMI (private mortgage insurance) protects the lender if you default and is required when your down payment is less than 20% of the purchase price. On a $400,000 home, PMI can cost $1,600–$4,000 per year. Once your loan-to-value ratio reaches 80% through payments or appreciation, you can request PMI cancellation. Putting 20% down avoids it entirely.